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8-K - FORM 8-K - Summit Materials, Inc.d134859d8k.htm

Exhibit 99.1

 

LOGO

Summit Materials Announces Fourth Quarter 2015 Results

Denver, Colorado (February 11, 2016) — Summit Materials, Inc. (NYSE: SUM, “Summit” or the “Company”), a leading vertically integrated construction materials company, announces results for the fourth quarter and full year of 2015. In the fourth quarter of 2015, the Company introduced a Cement Segment as a new segment and reclassified its segments into West, East and Cement. All historical financial information presented in this press release reflects such change. The Company has posted supplementary materials to its investor relations website.

Highlights – Fourth Quarter 2015 Compared to Fourth Quarter 2014:

 

    Aggregates volume and price up 8.0% and 7.3%, respectively; organic price up 6.9%

 

    Cement volume and price up 129.3% and 24.7%, respectively

 

    Net revenue increased 22.3%, with growth in all segments, primarily from acquisitions

 

    Adjusted net income of $34.4 million, or Adjusted EPS of $0.34

 

    Net income attributable to Summit Materials, Inc. of $23.4 million, or EPS of $0.47

 

    Adjusted EBITDA grew 44.9% to $90.3 million

 

    Issued $300.0 million aggregate principal amount of 6.125% Senior Notes due 2023

 

    Redeemed $153.8 million aggregate principal amount of outstanding 10 1/2% Senior Notes due 2020 (“2020 Notes”)

Highlights – Full Year 2015 Compared to Full Year 2014:

 

    Volume and price increased across most lines of business

 

    Net revenue increased 20.5%, led by West and Cement Segments

 

    Adjusted net income of $74.7 million

 

    Net income attributable to Summit Materials, Inc. of $27.7 million

 

    Adjusted EBITDA increased 52.1% to $287.5 million

 

    Gross margin improved 460 basis points

 

    Redeemed entire $625.0 million aggregate principal amount of the 2020 Notes

 

    Reduced interest expense by $2.1 million to $84.6 million

 

    After the close of full year 2015, in February 2016, Summit acquired American Materials Company (“AMC”), an aggregates company headquartered in Wilmington, NC. The acquisition expanded Summit’s geographic reach into the high-growth coastal North and South Carolina markets through five strategically positioned sand and gravel operations, with an estimated 40.5 million tons of combined aggregates reserves.

Tom Hill, CEO of Summit, stated, “2015 marked a significant year of progress for our company, in which we meaningfully enhanced our materials exposure, improved our capital position and met or exceeded nearly all our core operating metrics. During the year, we increased our Adjusted EBITDA margin by approximately 460 basis points primarily driven by organic price improvement in each of our lines of business and the successful integration of our accretive acquisitions, especially in cement. In our core aggregates business we finished strong with fourth quarter volume up 8.0% and organic price up 6.9%, representing the fourth straight quarter of improved pricing. In cement, we more than doubled our shipments in the fourth quarter and capitalized on positive pricing opportunities in our markets, while further solidifying our strategic position in the upper Midwest. In our ready-mix and asphalt businesses our fourth quarter gross margin improved 500 basis points reflecting the benefits of our vertically integrated businesses. This collective improvement demonstrates the strength of our materials based-strategy, which focuses on securing attractively positioned reserves in well-structured markets, with selective downstream exposure.”

 

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Mr. Hill continued, “We are pleased with the positive momentum in our business during 2015. The fundamentals in our markets remain quite positive for private construction activity, and we believe we are still in the early stages of the U.S. construction recovery. Additionally, our infrastructure end markets are poised to potentially benefit from the recent passage of the five-year highway bill, the FAST Act, in December 2015. The enhanced visibility of the FAST Act provides a catalyst for states to embark on larger scale and more material-intensive projects. Specifically in Texas, our markets continue to exhibit positive economic growth, population influxes and increased spending on infrastructure. As we move forward in 2016 we believe we are on firm footing to execute on our growth, price and cost initiatives to deliver on our Adjusted EBITDA expectations.”

Brian Harris, CFO of Summit, stated, “During 2015, we generated positive cash flow on our expanding operations and improved our credit metrics. Our upsized bond offering in late 2015 was met with strong demand and provided us with an attractive source of funds to refinance our debt and lower our cost of capital. We invested wisely in our capacity and equipment to enhance our ability to serve customers and support pricing initiatives, with our capex representing 6.9% of net revenue in 2015. We ended the year with a prudently levered balance sheet and ample capital resources to continue executing our strategic growth initiatives in a disciplined manner. We are pleased with our financial progress and into 2016 we remain committed to further increasing our Adjusted EBITDA to produce additional cash flow and generate value for stockholders.”

Reporting Region Reclassification into West, East and Cement Segments

Summit’s segment data reflects the reclassification of its operating and reporting segments in the fourth quarter of 2015 into the West, East and Cement Segments, which replaces the former West, Central and East Region segment composition.

 

    The West Region – unchanged

 

    The East Region – combines the former East and Central Regions, excluding the cement business

 

    Cement Segment – represents the cement business

Mr. Hill commented, “Our revised reporting segments reflect the increased significance of our business to cement, primarily attributable to the acquisition of the Davenport cement plant assets in July 2015. The acquisition approximately doubled our cement capacity and has already begun to contribute favorably to our results.”

Fourth Quarter 2015 Operating Results

In the fourth quarter of 2015, net revenue increased 22.3% to $359.5 million, compared to $294.0 million in the prior year quarter. The improvement in net revenue was primarily attributable to an increase in volumes and price in aggregates and cement. Net revenue growth from acquisitions for the West Segment was $15.7 million compared to the prior year quarter.

Adjusted EBITDA grew 44.9% to $90.3 million, compared to $62.3 million in the prior year quarter, with growth in all segments. As a percentage of net revenue, Adjusted EBITDA improved to 25.1%, compared to 21.2% in the prior year quarter. Adjusted EBITDA by segment in the fourth quarter 2015 compared to the prior year quarter was as follows:

 

    The West Segment increased $9.1 million, or 30.3%, primarily driven by volume and price growth across all lines of business and the impact of acquisitions in our Utah-based market.

 

    The East Segment improved $4.7 million, or 19.0%, mainly as a result of a higher mix of revenue from aggregates, along with volume and price growth in aggregates and ready-mixed concrete.

 

    The Cement Segment grew $18.1 million, or 141.4%, largely attributable to higher volume and price due to the favorable impact of the Davenport cement plant acquisition and stronger end market demand.

Gross profit increased 40.7% to $130.7 million, compared to $92.9 million in the prior year quarter. As a percentage of net revenue, gross margin improved to 36.3%, compared to 31.6% in the prior year quarter, primarily attributable to improved profitability in aggregates and products, a higher mix of revenue from cement as a result of acquisition activity and lower energy costs.

 

    Aggregates Results – Net revenue from aggregates increased 15.7% to $57.1 million. Aggregates volumes grew 8.0% driven by 4.4% organic volume growth and the remainder attributable to acquisitions. Aggregates organic price increased 6.9% with the improvement due to higher prices in all segments. Gross margin from aggregates increased to 65.1%, compared to 54.5% in the prior year quarter.

 

    Cement Results – Net revenue from cement grew 194.0% to $70.0 million. Cement volume and price increased 129.3% and 24.7%, respectively, mainly attributable to the acquisition of the Davenport cement plant and overall improved market pricing. Gross margin from cement was 45.6%, compared to 61.9% in the prior year quarter due to the timing of major repair and maintenance expense and customer mix.

 

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    Products Results – Net revenue from products increased 10.3% to $168.5 million. Ready-mixed concrete volumes were up 7.9% primarily attributable to stronger demand and acquisitions. Ready-mixed concrete price increased 3.4%, largely benefitting from the pass through of higher cement prices. Asphalt price rose 1.1% mainly due to geographic mix with volume off 2.6% due to unfavorable weather in our East Segment. Gross margin from products expanded to 25.4%, compared to 20.4% in the prior year quarter.

Adjusted net income in the fourth quarter 2015 was $34.4 million, or Adjusted EPS of $0.34 per diluted share of Class A common stock. Before adjustments, net income attributable to Summit Materials, Inc. in the fourth quarter 2015 was $23.4 million, or EPS of $0.47 per diluted share of Class A common stock. The shares of Class A common stock are issued by Summit Materials, Inc., and as such the earnings and equity interests of noncontrolling interests, including LP Units, are not included in basic or diluted earnings per share.

Full Year 2015 Operating Results

In the full year 2015, net revenue increased 20.5% to $1,290.0 million. The increase in net revenue was primarily attributable to an increase in volumes and price across most of our lines of business, led by the West and Cement Segments. Net revenue growth from acquisitions was $108.3 million compared to the prior year, excluding the Cement Segment.

Adjusted EBITDA increased 52.1% to $287.5 million, with growth in all segments. As a percentage of net revenue, Adjusted EBITDA improved to 22.3%, compared to 17.7% in the prior year.

Gross profit grew 39.3% to $441.7 million. As a percentage of net revenue, gross margin improved to 34.2%, compared to 29.6% in the prior year, primarily reflecting improved profitability in aggregates, cement and products, in addition to a higher mix of revenue from aggregates and cement as a result of organic improvements and acquisition activity.

Adjusted net income for the full year 2015 was $74.7 million, or $0.76 per diluted share of Class A common stock. Before adjustments, net income attributable to Summit Materials, Inc. was $27.7 million, or $0.52 per diluted share of Class A common stock.

Liquidity and Capital Resources

In November 2015, Summit issued $300.0 million aggregate principal amount of 6.125% Senior Notes due 2023. The Company used a portion of the net proceeds from the issuance of the senior notes to redeem the remaining $153.8 million aggregate principal amount of its outstanding 2020 Notes and to pay related fees and expenses, with the remainder of net proceeds available for general corporate purposes and growth initiatives.

At January 2, 2016, the Company had cash of $186.4 million and total outstanding debt of $1,291.9 million. As of January 2, 2016, the Company’s borrowing capacity was $210.6 million under its $235.0 million revolving credit facility, excluding $24.4 million outstanding letters of credit.

In December 2015, Summit declared and paid a stock dividend of 0.015 shares of the Company’s Class A common stock for each outstanding share of Class A common stock. As of January 2, 2016, Summit had 49,745,944 shares of Class A common stock or 100,051,678 assuming conversion of the outstanding LP Units.

Full Year 2016 Outlook

For the full year 2016, based on current market conditions Summit expects to generate Adjusted EBITDA in the range of $325.0 million to $345.0 million, compared to Adjusted EBITDA of $287.5 million in 2015. The Adjusted EBITDA growth outlook assumes organic improvement, along with the residual impact of acquisitions completed since the beginning of 2015 through today, including the acquisition of AMC in early February 2016.

Summit continues to target approximately $30.0 million of annualized Adjusted EBITDA per year from acquisitions. At this time, the full year 2016 Adjusted EBITDA outlook range of $325.0 million to $345.0 million excludes the potential upside from any future acquisitions due to the unspecified closing dates of any future acquisitions, the timing of which will impact the magnitude of acquired Adjusted EBITDA realized in 2016.

Webcast and Conference Call Information

Summit will conduct a conference call at 11:00 a.m. Eastern Time (9:00 a.m. Mountain Time) on Thursday, February 11, 2016 to review fourth quarter and full year 2015 results, discuss recent events, and conduct a question-and-answer period. A webcast of the conference call and presentation slides to be referred to on the call will be available in the Investors section of Summit’s website at

investors.summit-materials.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download, and install any necessary audio software.

 

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To participate in the telephone conference call:

 

  Domestic:    1-877-407-0784   
  International:    1-201-689-8560   
  Conference ID:    96807825   

To listen to a replay of the telephone conference call:

 

  Domestic:    1-877-870-5176   
  International:    1-858-384-5517   
  Conference ID:    13628697   
  The playback recording can be accessed through March 11, 2016

About Summit Materials

Summit Materials is a leading vertically integrated materials-based company that supplies aggregates, cement, ready-mixed concrete and asphalt in the United States and British Columbia, Canada. Summit is a geographically diverse, materials-based business of scale that offers customers a single-source provider of construction materials and related downstream products in the public infrastructure, residential and nonresidential, and end markets. Summit has completed more than 35 acquisitions since its founding and continues to pursue growth opportunities in new and existing markets.

For more information about Summit Materials, please visit www.summit-materials.com.

Non-GAAP Financial Measures

The rules of the SEC regulate the use in filings with the SEC of “non-GAAP financial measures,” such as adjusted net income, Adjusted EPS, Adjusted EBITDA, gross profit, gross revenue, free cash flow and Further Adjusted EBITDA, which are derived on the basis of methodologies other than in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). We have provided these measures because, among other things, we believe that they provide investors with additional information to measure our performance, evaluate our ability to service our debt and evaluate certain flexibility under our restrictive covenants. Further Adjusted EBITDA is defined in our senior secured credit facilities and used to measure compliance with covenants, including interest coverage and debt incurrence, and is used to measure our debt incurrence and restricted payment capacity under the indenture governing our senior notes. Our adjusted net income, Adjusted EPS, Adjusted EBITDA, gross profit, net revenue, free cash flow and Further Adjusted EBITDA, may vary from the use of such terms by others and should not be considered as alternatives to net income (loss), operating income (loss), revenue or any other performance measures derived in accordance with U.S. GAAP as measures of operating performance or to cash flows as measures of liquidity.

Adjusted EBITDA and Further Adjusted EBITDA and other non-GAAP measures have important limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under U.S. GAAP. Some of the limitations of Adjusted EBITDA and Further Adjusted EBITDA are that these measures do not reflect: (i) our cash expenditures or future requirements for capital expenditures or contractual commitments; (ii) changes in, or cash requirements for, our working capital needs; (iii) interest expense or cash requirements necessary to service interest and principal payments on our debt; (iv) income tax payments we are required to make; and (v) any cash requirements for the replacement cost of assets being depreciated or amortized. Because of these limitations, we rely primarily on our U.S. GAAP results and use Adjusted EBITDA and Further Adjusted EBITDA only supplementally.

Adjusted EBITDA, Further Adjusted EBITDA, gross profit, adjusted net income, Adjusted EPS and free cash flow reflect an additional way of viewing aspects of our business that, when viewed with our GAAP results and the accompanying reconciliations to U.S. GAAP financial measures included in the tables attached to this press release, may provide a more complete understanding of factors and trends affecting our business. However, non-GAAP financial measures should not be construed as being more important than other comparable U.S. GAAP financial measures and should be considered in conjunction with the U.S. GAAP measures. In addition, non-GAAP financial measures are not standardized; therefore, it may not be possible to compare such financial measures with other companies’ non-GAAP financial measures having the same or similar names. We strongly encourage investors to review our consolidated financial statements in their entirety and not rely on any single financial measure.

Reconciliations of the non-GAAP measures used in this press release are included in the tables attached to this press release.

 

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Cautionary Statement Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include all statements that do not relate solely to historical or current facts, and you can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “will,” “should,” “seeks,” “intends,” “trends,” “plans,” “estimates,” “projects” or “anticipates” or similar expressions that concern our strategy, plans, expectations or intentions. Any and all statements made relating to the macroeconomic outlook for our markets, potential acquisition activity, our estimated and projected earnings, margins, costs, expenditures, cash flows, sales volumes and financial results are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those expected. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, it is very difficult to predict the impact of known factors, and, of course, it is impossible to anticipate all factors that could affect our actual results.

In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. Important factors could affect our results and could cause results to differ materially from those expressed in our forward-looking statements, including but not limited to the factors discussed in the section entitled “Risk Factors” in our prospectus filed with the SEC on August 7, 2015. Such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov.

We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

 

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SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Consolidated Statements of Operations

($ in thousands, except share and per share amounts)

 

     2015     2014  

Revenue:

    

Product

   $ 1,043,843      $ 806,280   

Service

     246,123        264,325   
  

 

 

   

 

 

 

Net revenue

     1,289,966        1,070,605   

Delivery and subcontract revenue

     142,331        133,626   
  

 

 

   

 

 

 

Total revenue

     1,432,297        1,204,231   
  

 

 

   

 

 

 

Cost of revenue (excluding items shown separately below):

    

Product

     676,457        566,986   

Service

     171,857        186,548   
  

 

 

   

 

 

 

Net cost of revenue

     848,314        753,534   

Delivery and subcontract cost

     142,331        133,626   
  

 

 

   

 

 

 

Total cost of revenue

     990,645        887,160   
  

 

 

   

 

 

 

General and administrative expenses

     177,769        150,732   

Goodwill impairment

     —          —     

Depreciation, depletion, amortization and accretion

     119,723        87,826   

Transaction costs

     9,519        8,554   
  

 

 

   

 

 

 

Operating income (loss)

     134,641        69,959   

Other income, net

     (2,425     (3,447

Loss on debt financings

     71,631        —     

Interest expense

     84,629        86,742   
  

 

 

   

 

 

 

Loss from continuing operations before taxes

     (19,194     (13,336

Income tax benefit

     (18,263     (6,983
  

 

 

   

 

 

 

Loss from continuing operations

     (931     (6,353

(Income) loss from discontinued operations

     (2,415     (71
  

 

 

   

 

 

 

Net income (loss)

     1,484        (6,282

Net (loss) income attributable to noncontrolling interest in subsidiaries

     (1,826     2,495   
    

 

 

 

Net loss attributable to Summit Holdings (1)

     (24,408   $ (8,777
  

 

 

   

 

 

 

Net income attributable to Summit Materials, Inc.

   $ 27,718     
  

 

 

   

Net loss per share of Class A common stock:

    

Basic

   $ 0.73     

Diluted

   $ 0.52     

Weighted average shares of Class A common stock:

    

Basic

     38,231,689     

Diluted

     88,336,574     

 

(1) Represents portion of business owned by private interests

 

6


SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

($ in thousands, except share and per share amounts)

 

Assets    2015     2014  

Current assets:

    

Cash and cash equivalents

   $ 186,405      $ 13,215   

Accounts receivable, net

     145,544        141,302   

Costs and estimated earnings in excess of billings

     5,690        10,174   

Inventories

     130,082        111,553   

Other current assets

     4,807        16,005   
  

 

 

   

 

 

 

Total current assets

     472,528        292,249   

Property, plant and equipment

     1,269,006        950,601   

Goodwill

     596,397        419,270   

Intangible assets

     15,005        17,647   

Other assets

     43,243        32,886   
  

 

 

   

 

 

 

Total assets

   $ 2,396,179      $ 1,712,653   
  

 

 

   

 

 

 

Liabilities, Redeemable Noncontrolling Interest and Stockholders' Equity/Partners' Interest

    

Current liabilities:

    

Current portion of debt

   $ 6,500      $ 5,275   

Current portion of acquisition-related liabilities

     20,584        18,402   

Accounts payable

     81,397        78,854   

Accrued expenses

     92,942        101,496   

Billings in excess of costs and estimated earnings

     13,081        8,958   
  

 

 

   

 

 

 

Total current liabilities

     214,504        212,985   

Long-term debt

     1,273,652        1,043,685   

Acquisition-related liabilities

     39,977        42,736   

Other noncurrent liabilities

     100,186        92,524   
  

 

 

   

 

 

 

Total liabilities

     1,628,319        1,391,930   
  

 

 

   

 

 

 

Redeemable noncontrolling interest

     —          33,740   

Stockholders' equity/partners' interest:

    

Class A common stock, par value $0.01 per share; 1,000,000,000 shares authorized, 49,745,944 shares issued and outstanding as of January 2, 2016

     497        —     

Class B common stock, par value $0.01 per share; 250,000,000 shares authorized, 69,007,297 shares issued and outstanding as of January 2, 2016

     690        —     

Partners' interest

     —          285,685   

Additional paid-in capital

     619,003        —     

Accumulated earnings

     10,870        —     

Accumulated other comprehensive loss

     (2,795     —     
  

 

 

   

 

 

 

Stockholders' equity/partners' interest:

     628,265        285,685   

Noncontrolling interest in consolidated subsidiaries

     1,362        1,298   

Noncontrolling interest in Summit Materials, Inc.

     138,233        —     
  

 

 

   

 

 

 

Total stockholders' equity/partners' interest

     767,860        286,983   
  

 

 

   

 

 

 

Total liabilities, redeemable noncontrolling interest and stockholders' equity/partners' interest

   $ 2,396,179      $ 1,712,653   
  

 

 

   

 

 

 

 

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SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

($ in thousands)

 

     2015     2014  

Cash flow from operating activities:

    

Net income (loss)

   $ 1,484      $ (6,282

Adjustments to reconcile net loss to net cash used inoperating activities:

    

Depreciation, depletion, amortization and accretion

     125,019        95,463   

Share-based compensation expense

     19,899        2,235   

Deferred income tax benefit

     (19,838     (5,927

Net gain on asset disposals

     (23,087     6,500   

Goodwill impairment

     —          —     

Net gain on debt financings

     (9,877     —     

Other

     (1,629     (957

(Increase) decrease in operating assets, net of acquisitions:

    

Accounts receivable, net

     3,852        (10,366

Inventories

     4,275        (3,735

Costs and estimated earnings in excess of billings

     6,604        1,359   

Other current assets

     11,438        (3,997

Other assets

     (1,369     4,767   

Increase (decrease) in operating liabilities, net of acquisitions:

    

Accounts payable

     (4,241     (6,455

Accrued expenses

     (14,354     13,311   

Billings in excess of costs and estimated earnings

     1,313        (305

Other liabilities

     (1,286     (6,373
  

 

 

   

 

 

 

Net cash provided by operating activities

     98,203        79,238   
  

 

 

   

 

 

 

Cash flow from investing activities:

    

Acquisitions, net of cash acquired

     (510,017     (397,854

Purchases of property, plant and equipment

     (88,950     (76,162

Proceeds from the sale of property, plant and equipment

     13,110        13,366   

Other

     1,510        (630
  

 

 

   

 

 

 

Net cash used for investing activities

     (584,347     (461,280
  

 

 

   

 

 

 

Cash flow from financing activities:

    

Proceeds from equity offerings

     1,037,444        —     

Capital issuance costs

     (61,609     —     

Capital contributions by partners

     —          24,350   

Proceeds from debt issuances

     1,748,875        762,250   

Debt issuance costs

     (14,246     (9,085

Payments on debt

     (1,505,486     (389,270

Purchase of noncontrolling interests

     (497,848     —     

Payments on acquisition-related liabilities

     (18,056     (10,935

Distributions from partnership

     (28,736     —     

Other

     (1     (88
  

 

 

   

 

 

 

Net cash provided by financing activities

     660,337        377,222   
  

 

 

   

 

 

 

Impact of cash on foreign currency

     (1,003     (149

Net increase (decrease) in cash

     173,190        (4,969
  

 

 

   

 

 

 

Cash and cash equivalents – beginning of period

     13,215        18,184   
  

 

 

   

 

 

 

Cash and cash equivalents – end of period

   $ 186,405      $ 13,215   
  

 

 

   

 

 

 
    

 

8


SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Revenue Data by Segment and Line of Business

($ in thousands)

 

     Three months ended      Twelve months ended  
     January 2,      December 27,      January 2,      December 27,  
     2016      2014      2016      2014  

Net Revenue by Segment

           

West

   $ 182,763       $ 167,958       $ 719,485       $ 608,671   

East

     101,902         97,809         374,997         356,361   

Cement

     74,867         28,273         195,484         105,573   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net Revenue

   $ 359,532       $ 294,040       $ 1,289,966       $ 1,070,605   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net Revenue by Line of Business

           

Materials

           

Aggregates

   $ 57,144       $ 49,389       $ 219,040       $ 161,497   

Cement (1)

     69,957         23,794         175,751         89,910   

Products

     168,532         152,746         649,052         554,873   
  

 

 

    

 

 

    

 

 

    

 

 

 

Materials and Products

     295,633         225,929         1,043,843         806,280   
  

 

 

    

 

 

    

 

 

    

 

 

 

Services

     63,899         68,111         246,123         264,325   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net Revenue

   $ 359,532       $ 294,040       $ 1,289,966       $ 1,070,605   
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross Profit

           

Materials

           

Aggregates

   $ 37,228       $ 26,931       $ 130,163       $ 87,799   

Cement (1)

     31,913         14,724         83,804         42,113   

Products

     42,812         31,107         162,466         115,810   

Services

     18,702         20,098         65,219         71,349   
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross Profit

   $ 130,655       $ 92,860       $ 441,652       $ 317,071   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Revenue for the cement line of business excludes revenue associated with the processing of hazardous and non-hazardous waste, which is processed into fuel and used in the cement plants. The revenue associated with waste processing is included in services. The cement segment gross profit includes the earnings from the waste processing operations.

 

9


SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Volume and Price Statistics

(Units in thousands)

 

     Three months ended     Twelve months ended  
Total Volume    January 2, 2016     December 27, 2014     January 2, 2016     December 27, 2014  

Aggregates (tons)

     8,348        7,728        32,297        25,413   

Cement (tons)

     633        276        1,733        1,049   

Ready-mixed concrete (cubic yards)

     913        846        3,406        2,814   

Asphalt (tons)

     1,070        1,098        4,359        4,271   
     Three months ended     Twelve months ended  
Pricing    January 2, 2016     December 27, 2014     January 2, 2016     December 27, 2014  

Aggregates (per ton)

   $ 9.42      $ 8.78      $ 9.19      $ 8.97   

Cement (per ton)

     112.76        90.42        104.94        90.01   

Ready-mixed concrete (per cubic yards)

     104.82        101.41        102.92        97.72   

Asphalt (per ton)

     58.15        57.54        57.67        55.62   
Year over Year Comparison    Volume     Pricing     Volume     Pricing  

Aggregates (per ton)

     8.0     7.3     27.1     2.5

Cement (per ton)

     129.3     24.7     65.2     16.6

Ready-mixed concrete (per cubic yards)

     7.9     3.4     21.0     5.3

Asphalt (per ton)

     (2.6 )%      1.1     2.1     3.7
Year over Year Comparison    Volume     Pricing     Volume     Pricing  
(Excluding acquisitions)                         

Aggregates (per ton)

     4.4     6.9     5.2     5.8

Cement (per ton)

     *        *        *        *   

Ready-mixed concrete (per cubic yards)

     3.1     2.6     3.6     4.5

Asphalt (per ton)

     (9.3 )%      1.4     (1.7 )%      3.6

 

* Davenport Assets were immediately integrated with our existing cement operations such that it is impracticable to bifurcate the results.

 

10


SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Reconciliations of Gross Revenue to Net Revenue by Line of Business

($ and Units in thousands)

 

     Three months ended January 2, 2016  
     Volumes      Pricing      Gross Revenue
by Product
     Intercompany
Elimination/Delivery
    Net
Revenue
 

Aggregates

     8,348       $ 9.42       $ 78,624       $ (21,480   $ 57,144   

Cement

     633         112.76         71,424         (1,467     69,957   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Materials

         $ 150,048       $ (22,947   $ 127,101   
Readymix      913         104.82         95,676         267        95,943   
Asphalt      1,070         58.15         62,256         (32     62,224   

Other Products

           74,723         (64,358     10,365   
        

 

 

    

 

 

   

 

 

 

Products

         $ 232,655       $ (64,123   $ 168,532   
     Twelve months ended January 2, 2016  
     Volumes      Pricing      Gross Revenue
by Product
     Intercompany
Elimination/Delivery
    Net
Revenue
 
Aggregates      32,297       $ 9.19       $ 296,960       $ (77,919   $ 219,041   

Cement

     1,733         104.94         181,901         (6,151     175,750   
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Materials

         $ 478,861       $ (84,070   $ 394,791   
Readymix      3,406         102.92         350,554         (293     350,261   
Asphalt      4,359         57.67         251,363         (182     251,181   

Other Products

           303,934         (256,324     47,610   
        

 

 

    

 

 

   

 

 

 

Products

         $ 905,851       $ (256,799   $ 649,052   

 

11


SUMMIT MATERIALS, INC. AND SUBSIDIARIES

Unaudited Reconciliations of Non-GAAP Financial Measures

($ in thousands, except share and per share amounts)

The tables below reconcile our net income (loss) to Further Adjusted EBITDA and present Adjusted EBITDA by segment for the three and twelve months ended January 2, 2015 and December 27, 2014.

 

     Three months ended     Twelve months ended  
     January 2,
2016
    December 27,
2014
    January 2,
2016
    December 27,
2014
 

Net income (loss)

   $ 47,416      $ 4,468      $ 1,484      $ (6,282

Interest expense

     22,398        24,187        84,629        86,742   

Income tax benefit

     (5,795     (4,485     (18,263     (6,983

Depreciation, depletion and amortization

     32,632        23,653        118,321        86,955   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

   $ 96,651      $ 47,823      $ 186,171      $ 160,432   
  

 

 

   

 

 

   

 

 

   

 

 

 

Accretion

     273        223        1,402        871   

Initial public offering costs

     —          —          28,296        —     

Loss on debt financings

     7,318        —          71,631        —     

Discontinued operations

     (1,600     285        (2,415     (71

Acquisition transaction expenses

     1,475        817        9,519        8,554   

Management fees and expenses

     —          1,678        1,046        4,933   

Non-cash compensation

     1,310        489        5,448        2,235   

(Gain) loss on disposal and impairment of assets

     (16,561     8,769        (16,561     8,735   

Other

     1,463        2,235        2,991        3,344   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 90,329      $ 62,319      $ 287,528      $ 189,033   
      

 

 

   

 

 

 

EBITDA for certain completed acquisitions

         20,450        23,105   
      

 

 

   

 

 

 

Further Adjusted EBITDA

       $ 307,978      $ 212,138   
      

 

 

   

 

 

 

Adjusted EBITDA by Segment

        

West

   $ 39,314      $ 30,167      $ 150,764      $ 102,272   

East

     29,545        24,821        92,303        73,822   

Cement

     30,948        12,820        74,845        35,133   

Corporate

     (9,478     (5,489     (30,384     (22,194
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 90,329      $ 62,319      $ 287,528      $ 189,033   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

12


The table below reconciles our net income per share attributable to Summit Materials, Inc. to adjusted earnings per share for the three and twelve months ended January 2, 2016.

 

Reconciliation of Net Income Per Share to
Adjusted EPS
   January 2, 2016  
     Three months ended      Twelve months ended  
(in thousands, except share and per share amounts)    Net Income      Per Share      Net Income      Per Share  

Net income attributable to Summit Materials, Inc.

   $ 23,363       $ 0.23       $ 27,718       $ 0.28   

Adjustments:

           

Net income attributable to noncontrolling interest

     23,962         0.24         (24,408      (0.25

Initial public offering costs

     —           —           28,296         0.29   

Loss on debt financings, net of tax

     3,671         0.04         59,696         0.61   

Gain on transfer of Bettendorf assets

     (16,561      (0.17      (16,561      (0.17
  

 

 

    

 

 

    

 

 

    

 

 

 

Adjusted diluted net income

   $ 34,435       $ 0.34       $ 74,741       $ 0.76   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted-average shares:

           

Class A common stock

     49,745,910            38,231,689      

LP Units outstanding

     50,306,370            59,911,631      
  

 

 

       

 

 

    

Adjusted diluted shares

     100,052,280            98,143,320      
  

 

 

       

 

 

    

The following table reconciles operating income to gross profit for the three and twelve months ended January 2, 2015 and December 27, 2014.

 

     Three months ended     Twelve months ended  
Reconciliation of Operating Income (Loss)
to Gross Profit
   January 2,
2016
    December 27,
2014
    January 2,
2016
    December 27,
2014
 
(in thousands)                         

Operating income

   $ 67,990      $ 23,307      $ 134,641      $ 69,959   

General and administrative expenses

     28,285        44,860        177,769        150,732   

Depreciation, depletion, amortization and accretion

     32,905        23,876        119,723        87,826   

Transaction costs

     1,475        817        9,519        8,554   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit

   $ 130,655      $ 92,860      $ 441,652      $ 317,071   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Margin(1)

     36.3     31.6     34.2     29.6

 

(1) Gross margin is defined as gross profit as a percentage of net revenue.

The following table reconciles net cash used for operating activities to free cash flow for the three and twelve months ended January 2, 2015 and December 27, 2014.

 

     Three months ended      Twelve months ended  
     January 2,
2016
     December 27,
2014
     January 2,
2016
     December 27,
2014
 

Net income (loss)

   $ 47,416       $ 4,468       $ 1,484       $ (6,282

Non- cash items

     (9,467      28,308         90,487         97,314   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income adjusted for non-cash items

     37,949         32,776         91,971         91,032   

Change in working capital accounts

     79,181         57,298         6,232         (11,794
  

 

 

    

 

 

    

 

 

    

 

 

 

Net cash provided by operating activities

     117,130         90,074         98,203         79,238   

Capital expenditures, net of asset sales

     (15,051      (8,127      (75,840      (62,796
  

 

 

    

 

 

    

 

 

    

 

 

 

Free cash flow

   $ 102,079       $ 81,947       $ 22,363       $ 16,442   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

13


Contact:

Investor Relations:

303-515-5159

Investorrelations@summit-materials.com

Media Contact:

303-515-5158

mediarelations@summit-materials.com

 

14